Vodafone Group Plc has hinted at the possibility of spinning off Mobile Money Service, Mpesa following its huge success, especially during the pandemic.
Mpesa allows customers to send and receive money on their mobile phones. In the last few years, financial services have grown to include loans, savings and payroll. The service is available in Kenya, Tanzania, Mozambique, Lesotho and the Democratic Republic of Congo.
The mobile money service soared in popularity during the COVID-19 pandemic due to lockdowns, social distancing and no contact recommendations; mobile money became a way of life for many users. Transactions reported grew by 45 per cent in the first quarter of 2020, compared to a similar period in the previous year.
Vodafone Chief Executive Officer Nick Read said it’s logical to keep M-Pesa within the telecommunications group, for now, to maintain benefits like distribution and cementing customer loyalty.
“In the future, there may be opportunities to scale further. At that point, I think we would make the decision as to whether we would want to do anything, let’s say, more inorganically. For now, Vodafone has decided to carve out its financial services activities into a new legal entity to highlight to our investors the size and scale of that business and also offer opportunities to grow it in different ways. Vodafone Chief Executive Officer Nick Read.
Citing the Central Bank of Kenya (CBK), Nick Read said the volume of Mpesa transactions is equivalent to about half of Kenya’s gross domestic product (GDP).
He further added that there is a possibility of Vodafone launching the service in other markets.
Vodafone’s majority-owned South African subsidiary Vodacom Group Ltd. recently partnered with China’s Alibaba Group Holding Ltd. to develop a so-called super-app called VodaPay for new services as users and potential users upgrade to smartphones.